• Aditya Kaushal

What could be Minimum Worse Scenario in Paints & Coatings Market because of COVID-19?

Paints and Coatings Market | Worse case scenario in pandemic

COVID-19 has affected the global economy on a larger scale. The initial impact can be seen for at least a quarter period of the business (up to two quarters assuming COVID-19 to be controlled by mid-June) in most of the cases of sectors across the global market. The global paints and coatings market, which was estimated to be about USD 152.10 billion in 2019, will see a drastic fall in 2020 with a sluggish decline of over 11.18% to nearly USD 135.09 billion, i.e., at least a drop of USD 17 billion y-o-y as per the current forecast.

Paints and Coatings | Global vs Regional Growth Rate Analysis

The global paints and coatings market will impact different factors this year. A few of them are:

  1. Raw materials supply-demand gap

  2. Price Hike & lower Profit Margin

  3. Production Labor Cost

  4. Declined Production

  5. Diminished demand for Paints & Coatings Products by End-User Industries/Consumers (Lock-down situation in countries across the globe)

  6. International Trade & Transportation Issues across the countries

The most commonly used pigment is TiO2 (titanium dioxide), and about 58.5% of the total Titanium dioxide market was consumed by paints & coatings manufacturers in 2019. In 2020, the production estimates of TiO2 will decline by at least st 30%, impacting the supply-demand gap. The European countries dependent on imports of TiO2 from China and other Asian countries will have a larger impact. India, a net importer of TiO2, will have to utilize its own TiO2 resources to minimize the supply-demand gap scenario. TiO2 is used as pigment due to its whiteness, opacity, and refractive indexability. It is commercially available in two grades- Anatase and Rutile. Rutile is higher in price and has more durability & stability, and more efficient than Anatase grade. TiO2 pigment accounts for approximately 25% of the total paints/coatings content. So the changes in the price of TiO2 will be one of the major factors to impact the price fluctuation of paints and coatings products in the upcoming years.

Due to the COVID-19, the countries have adopted the lockdown method to suppress the spread of the virus for controlling the pandemic. The paints and coatings business is directly linked to the raw material suppliers (pigment, solvent, binders, and additives), the sales and distribution retail channels, and the industrial businesses such as (oil & gas, pipeline, automotive, building & construction, general industrial, packaging, aerospace, etc.).

Global paints and coatings market analysis by industry

The global paints and coatings market in each end-user industry will slump by more than 10%. Architectural coatings will have the highest decline rate in 2020 as shown in the adjacent figure. As per the current forecast, the market will take at least 3 years to re-gain the level of consumption in 2019.

The production cost of the paints and coatings differs in each region by proportions of each contribution by raw material cost, employee cost, administration cost, electricity/utility cost, selling & distribution cost, & other costs (including R&D).

Paints and Coatings Production Cost Components

Table: Paints & Coatings Production Cost Components: Percentage Range by Region, 2019 (Based on data available for Top Paints and Coatings Manufacturers in each region)